Multinational Guidelines for Canadian Insurance

When it comes to insurance, Canada has some very strict regulations that must be followed to remain compliant.

What's the Difference?

Companies who choose not to purchase a local policy while doing business in Canada can face legal and tax implications should they need to file a claim. While Canada does permit non-admitted insurance, it comes with restrictions; however, many countries prohibit it altogether.

Admitted Vs. Non-Admitted

Admitted: Insurance issued by an insurer licensed and regulated in the country where the risk is located, compliant with local laws and backed by local guaranty funds.

Non-Admitted: Insurance issued by a foreign insurer not licensed in the country where the risk is located; it may provide coverage but can create tax, legal, and regulatory complications.

If a company with a home policy of $45M in property & casualty coverage experiences $25M worth of damage and lost wages from a rogue forest fire, the remaining $20M could be eaten up by Canada's regulatory policies and fees.

The potential fees, penalties, and taxes that could incur depend on the individual province. Below you will find the updated multinational guidelines for Canadian insurance.

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Updated 2025 Provincial Tax, Penalties, and Fees for Non-Admitted Insurance

Province/Territory	Provincial Tax	Penalty	Special Broker Requirement
Alberta	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 10% for property & casualty If placed through a “special broker”, the tax is 3% for life/accident & sickness insurance and 4% for other classes.	If the 10% surcharge isn’t remitted within 30 days, an additional 10% penalty will be added, for a total penalty of 20%	Yes If a U.S. or foreign broker wishes to facilitate an unlicensed placement on behalf of a Cdn. client, Cdn. broker has to act as a sub-broker and have quote received directly from the unlicensed insurer. Otherwise, there is no privity of contract between client and a broker holding the special license required.
British Columbia	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 7% for property & casualty	5% of the outstanding amount to a maximum of $500	No
Manitoba	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 3% for property & casualty PLUS 1.25% fire tax for Property	1% to 3% of the outstanding amount	Yes
New Brunswick	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 3% for property & casualty	6% annual interest on any unpaid taxes	Yes
Newfoundland & Labrador	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 5% for property & casualty *Only applicable if the unlicensed insurance is purchased through a special broker*	10% of tax owed, up to $5,000 per return not filed, and discretionary penalties based on tax authority’s “loss”	Yes
Northwest Territories & Nunavut	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 3% for property & casualty PLUS 1% fire tax for Property	Discretionary	No
Nova Scotia	Unlicensed insurance is not permitted under the Nova Scotia legislation and there is no allowance for special brokers	An agent or broker becomes personally liable to the insured on all contracts made by or through a broker with an unlicensed insurer	N/A
Ontario	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 3% for casualty  PLUS 3.5% unlicensed premium tax for property	5-50% of the amount outstanding	No
Prince Edward Island	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 4% for property & casualty PLUS 1% fire tax for Property	6% annual interest on any unpaid tax	Yes
Saskatchewan	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 3.3% for property & casualty	200% of the outstanding amount	Yes
Quebec	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 10% for property & casualty  PLUS 1% fire tax for Property	$500 per return plus $10 after the first 10 days from the return deadline	No
Yukon	The regulatory charge/penalty for unlicensed insurance placed directly with an unlicensed insurer is 2% for property & casualty	Discretionary	Yes

Navigating Canada’s provincial tax and penalty framework for unlicensed insurance placements is far from straightforward. While some provinces allow structured “special broker” solutions, others impose steep penalties—or outright prohibit unlicensed placements. Alberta’s recent regulatory changes, for example, highlight how quickly these rules can shift. The key takeaway: even experienced brokers outside Canada risk exposing their clients to unnecessary tax burdens, penalties, or unenforceable coverage if they don’t partner with a locally licensed intermediary.

Enterprises who wish to expand multinationally and want to avoid potential fees and penalties should consider a Global Master Insurance Policy which provides global protection on a global scale, and also includes additional coverage lines such as Difference-In-Limits (DIL) and Difference-In-Coverage (DIC) which can close the gaps between your Home Policy and your Local Policy providing you with full 360 coverage.

Don't Wait Until It's Too Late

Rather than waiting until an audit or claim uncovers compliance gaps, consider conducting a quiet compliance stress test of your cross-border placements. Engaging a Canadian-licensed broker (such as Wilson M. Beck Global Risks) to “shadow review” one of your current programs can surface hidden exposures before they become expensive surprises—while also signaling to clients that you’re proactively safeguarding their interests.

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